Excerpt:direct taxation - maintainability of revision - proviso (b) of section 24(1) of gift tax act, 1958 - revision filed before commissioner by assessee after filing an appeal in tribunal - application to withdraw appeal stating fact of revision filed - assessee has choice to avail either remedy of filing appeal in tribunal or revision before commissioner - revision filed even before withdrawal of appeal is maintainable. - - therefore for the assessment year 1958-59 the said amount was assessed both under the gift tax act as well as the wealth tax act he further included interest on the said sum of rs......petition has been filed.8. the question which tails for consideration in this case is whether an appeal filed to the tribunal but permitted to be withdrawn, can be said to have formed the subject of an appeal within the meaning of proviso (b) to section 24(1) of the gift tax act, which is almost in pari materia with proviso (c) to section 33a(2) of the income tax act, 1922. the only difference is that the word made after the word 'been' is omitted from proviso (b) to section 24a(1), the relevant portion of which reads:'or has been the subject of an appeal to the tribunal'.9. a similar provision under the wealth tax act came up for consideration before the bombay high court and it was held that the words or has been the subject of an appeal to the tribunal' mean an effective appeal to.....

Judgment:

Manchanda, J.

1. This is a writ petition under Article 220 of the Constitution directed against the order, dated the 12th Sept. 1960 of the Commissioner of Income Tax and Gift Tax, U. P., whereby it was held that the application for revision under Section 24(1) of the Gift Tax Act was incompetent and could not be entertained.

2. The undisputed facts of the case are that on the 18th of July 1957, a son was born to Mr. Vijayapat Singhania the brother of petitioner Ajaypat Singhania, a minor. On the 28th August, 1957, the petitioner's natural guardian Mr. Kailashpat Singhania, withdrew from Ajayapat's (Petitioner's) deposit account with Messrs. Juggilal Kamlapat, a sum of Rs. 10,000/- and Rs. 2,00,000/-aggregating to Rs. 2,10,000/- and placed the same to the credit of Mr. Vijaypat Singhania's newly born son's (Choota Gigga) account intending it to be a gift to him by the petitioner.

3. On the 20th October, 1958, the return forms required were sent by the Gift Tax Officer along with the notice under Section 13(2) of the Gift Tax Act. On 8th November, 1958, the Gift Tax return was filed by the said guardian showing a gift of Rs. 2,10,000/-. On the 27th December, 1958, the gift was accepted by the guardian, Vijayatpat Singhania on behalf of the donee.

4. On the 29th of January, 1959, Mr. Kailashpat Singhania applied for the cancellation of the gift tax return on the ground that the gift was void as it was made by a minor. This contention however was not accepted and on the 26th of March, 1959, the Gift Tax Officer completed the assessment. The same officer was also the Wealth Tax Officer and he assessed the sum of Rs. 2,10,000/- in the hands of the petitioner, Ajaypat Singhania. Therefore for the assessment year 1958-59 the said amount was assessed both under the Gift Tax Act as well as the Wealth Tax Act He further included interest on the said sum of Rs. 2,10,000/- which had been treated by him as gifted to the minor son of Ajayapat Singhania, as interest in the hands of the petitioner.

5. The petitioner appealed to the appellate Assistant Commissioner. While the appeal was pending, the petitioner attained majority on 19-7-1959. On 11-8-1959 the Appellate Assistant Commissioner dismissed the appeal. On the 28th of November, 1958, the petitioner filed an appeal to the appellate Tribunal. It appears that during the pendency of this appeal Mr. Padampat Singhania the uncle of the petitioner met the Commissioner of Income Tax on the 12th of March, 1960. He thereafter wrote a letter (annexure 'G' to the petition) to the Commissioner, on the 17th of March, 1960 apropos his interview and referred to the present case in these words:

'It was the Income Tax Officer who pointedout to us that the Gift was void in law. It wason his advice that we cancelled the gift, and itwas also on his advice that we included theamount of gift in the Wealth Tax Return of Ajaypat Singhania and also offered interest on theamount of his assessment for Income Tax. Ajaypathas been subject to Gift Tax and Wealth Taxin respect of the amount of gift and Income Taxin respect of the interest on the amount gifted....There was absolutely no motive to avoid any tax.This matter has been taken up in appeal to theIncome Tax Appellate Tribunal. If, however, youare favourably inclined to exempt Ajaypat fromdouble taxation, I am prepared to withdraw myappeal from the Income Tax Appellate Tribunaland to leave the whole to your judgment. Ifnecessary, I am prepared to file with you a regularapplication under Section 33A.'

This letter was replied to by the Commissionervide Annexure 'H' dated 2-4-1960. The ultimateparagraph thereof relates to the present case andreads:

'In respect of the Gift Tax matter dealt with in paras 5, 6 & 7 I have also to state that as the matter is sub judice, it is not fair for me to give opinion on the merits of the case However, I had given my viewpoint to your representatives who had attended before me in respect to the request for keeping the tax to abeyance till the appeal decision. It a revision petition is filed under Section 33A(2) of the Act, I shall certainty decide the same on merit as I deem justified.'

The reference to Section 33A(2) of the Act in the letter obviously is to the Income Tax Act of 1922 The corresponding provision under the Gift Tax Act is Section 24(1).

6. On the 3rd May, 1960 the petitioner made an application to the Tribunal for withdrawing the appeal This application was in these words:

'The applicant has filed with the Commissioner of Gift Tax, U. P. Lucknow a revision application under Section 21 of the Gift Tax Act, 1958. The applicant, therefore, prays that the appeal quoted above be treated as withdrawn '

7. Apparently, on the same date that this application was made a revision was also Bled under Section 24(1} of the Gift Tax Act before the Commissioner The Tribunal by its order dated 29th June. 1960, granted the application to withdraw the appeal and dismissed the appeal as withdrawn, On the 12th of September 1960, the Commissioner of Income Tax contrary to the assurance given, that he would dispose of the revision, it filed on the merits as he deems, justified, dismissed the revision in limine, holding that as an appeal had been Filed to the Tribunal no revision lay. Aggrieved by that order the present writ petition has been filed.

8. The question which tails for consideration in this case is whether an appeal filed to the Tribunal but permitted to be withdrawn, can be said to have formed the subject of an appeal within the meaning of proviso (b) to Section 24(1) of the Gift Tax Act, which is almost in pari materia with proviso (c) to Section 33A(2) of the Income Tax Act, 1922. The only difference is that the word made after the word 'been' is omitted from proviso (b) to Section 24A(1), the relevant portion of which reads:

'Or has been the subject of an appeal to the Tribunal'.

9. A similar provision under the Wealth Tax Act came up for consideration before the Bombay High Court and it was held that the words or has been the subject of an appeal to the Tribunal' mean an effective appeal to the Tribunal and contemplate a decision on the merits by the Tribunal and not merely an abortive appeal or an appeal which has been withdrawn and no decision given on merits. The decision of the Bombay High Court is by a Division Bench and on the principle of stare decisis particularly when the Gift TAX Act is an all India Act. I would have followed that decision.

10. The learned Standing Counsel, however attempted to distinguish the Bombay case by saying that the revision to the Commissioner in the present case was filed simultaneously or earlier on the same day than the application for withdrawal before the Tribunal and therefore, at the point of time when the revision was filed an appeal was in fact pending and has not vet been withdrawn. To my mind this technicality makes little or no difference. It is true that the revision had already been tiled before the Commissioner and later oh the same day an application was moved before the Tribunal for permission to withdraw that appeal The fact that a Revision has been filed was brought to the notice of the Tribunal in the very application for withdrawal. No secret was made of it and the Tribunal knowing that, granted per-mission to withdraw the appeal. In any event on the day when the Commissioner came to decide the revision there was no appeal pending before the Tribunal and therefore rightly the Commissioner did not make any point of the fact that the revision was filed earlier on the same day when an application for withdrawal of the appeal had not yet been moved and much less granted by the Tribunal. The Commissioner dismissed the revision in limine on the short ground that as an appeal had once been filed to the Tribunal and even if it was permitted to be withdrawn by the Tribunal his jurisdiction to entertain the revision stood irrevocably barred The distinction sought to be drawn is in my judgment, a distinction without a difference.

11. Apart from authority I would also have been inclined to hold that the assessee had a right either to have his grievance ventilated and determined on merits by the Tribunal on appeal or by the Commissioner by way of revision The choice necessarily must be only that of the assessee and if he asks for permission to withdraw his appeal, filed before the Tribunal and that permission is granted there is a clear indication that be does not want his grievance ventilated and determined by the Tribunal but by the Commissioner. That right or choice cannot be denied to him on any technical or critical grounds So long as no decision has been given on the merits or even on the question of limitation by the Tribunal, the case cannot in my judgment be said to have formed the subject matter of an appeal to the Tribunal.

12. For the reasons given above. I would direct that a writ in the nature of certiorari will issue gashing the order of the Commissioner of Income Tax and Gifts Tax dated 12-9-1960 holding that the petitioner's application For revision undo Section 24(1) of the Gift Tax Act was incompetent and with the direction that he will entertain the revision and dispose it of in accordance with law.